MOROCCO AND NORTH AFRICA: NEW TARGETS FOR MULTINATIONAL ENTERPRISES?

Author: Diego Caballero Vélez
21/12/2014
d.caballerovelez(a)gmail.com

The Arab Spring of 2010 that started at Tahir Square in Cairo and is spread around the entire Arab world represents a cultural, social and economic impact for the countries of Middle East and North Africa.
With the Arab Spring, the speculation about the economic situation of the North Africa countries grows because of the series of social protests producing radical changes in the governments.

The economic outlook changes producing a major fear in international enterprises for investing in this region, but currently, is it still being a not very good region to export?

First of all, we must make differences between the different Arab countries of the region. Meanwhile Algeria and Libya are economies based on one only sector: hydrocarbon exportation; Morocco, Egypt and Tunisia base their economies on diverse sectors: manufacturing exports, agricultural products, foreign investment, tourism, etc.

We can see in Libya and Algeria a surplus in the economy, unlike the others with important economic deficit because their economies are based on more irregular sectors. In Egypt, the Muslim Brotherhood are reluctant to external debt and interact with external funding organizations so they are opting for alternative measures such as increasing income tax and recuperate lands given to private companies, that is to say, they use a populist politics because of the political situation of the country applied to economic politics, growing the speculation between multinationals that are interested in export there.

In Tunisia, are getting down to business to facilitate the entry of international investment so are negotiating a plan with the World Bank to simplify the way of doing business in the country. Finally, Morocco is the most reliable country for doing business because the Moroccan government pretends to consolidate his growing economy with consistent economic politics.

Regarding to foreign direct investment we could talk about the big beneficiary: Morocco. Foreign investment has increased significantly in the Maghreb country thanks to an increased social stability, economic liberalization and purchase of public enterprises by foreign investors. Morocco has also established free trade agreements with third parties as USA, Turkey and the Arab free trade zone. The most important sectors
in which foreign enterprises invest are telecommunications, industry, finance and insurance, mining and petrochemical. But the obstacles are still a lot, because the difficulty access to the country such as the cost of financing and the high required bank guarantee (226 %), makes that many multinationals think twice before fixing his eyes on this country.

In conclusion, investing in these countries always involve know risks. North Africa sees little by little signs of international investment recovery after the decline suffered in 2011 due to social riots. In my opinion, the key of investment would be being aware about the movements that occur in the region to take advantage of the opportunities that are appearing.

SOURCES
- www.Africainfomarket.com Situación de la Inversion Directa en Marruecos, 2007 July
- ESCRIBANO, G. La Reconfiguración de las Políticas Económicas en el Norte de África, Real Instituto Elcano http://www.realinstitutoelcano.org/wps/portal/rielcano/contenido?WCM_GLOBAL_CONTEXT=/elcano/elcano_es/zonas_es/mediterraneo+y+mundo+arabe/ari48-2012